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Auditors' Reporton the Financial Statements
ofFirst Bangladesh Fixed Income Fund
For the year ended June 30, 2013
Howladar Yunus &'Co.Gulshan Office
INDEPENDENT AUDITORS' REPORT TO THE TRUSTEEOF
FIRST BANGLADESH FIXED INCOME FUND
Howladar Y!Jnus& Co.House - 14 (4th floor)Road - 16A, Gulshan -1Dhaka - 1212Bangladesh
T +88 (0)2 9883863F +88 (0)2 9552989www.howladaryunus.com
IntroductionWe have audited the accompanying Financial Statements of First Bangladesh Fixed Income Fund(the Fund) namely, which comprise the Statement of Financial Position (Balance sheet) as at June30, 2013 and the Statement of Comprehensive Income (Revenue Account), Statement of CashFlows for the year then ended, and a summary of significant accounting policies and otherexplanatory information.
Management's responsibility for the financial statementManagement is responsible for the preparation and fair presentation of these financialstatements in accordance with Bangladesh Financial Reporting Standards (BFRSs), the CompaniesAct 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations andfor such internal control as management determines is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud or error.
Auditors' responsibilityOur responsibility is to express an opinion on these Financial Statements based on our audit. Weconducted our audit in accordance with Bangladesh Standards on Auditing (BSAs). Thosestandards require that we comply with relevant ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment, including the assessment of the risk of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments; we consider internalcontrol relevant to the entity's preparation and fair presentation of the financial statements inorder to design audit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the entity's internal control. An auditalso includes evaluating the appropriateness of accounting policies used and the reasonablenessof accounting estimates made by management, as well as evaluating the overall presentation ofthe financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasisfor our audit opinion.
OpinionIn our opinion, the financial statements present fairly, in all material respects, the financialposition of First Bangladesh Fixed Income Fund as at June 30, 2013 and its financial performanceand its cash flows for the period then ended in accordance with Bangladesh Financial ReportingStandards (BFRSs).
Page 1
Chartered AccountantsCorrespondent firm of Grant Thornton International Ltd.
Howladar Yunus & Co.Chartered Accountants.
We also report that:a) we have obtained a" the information and explanations which to the best of our knowledge
and belief were necessary for the purposes of our audit and made due verification thereof;b) in our opinion, proper books of account as required by law have been kept by the company
so far as it appeared from our examination of those books;c) the Statement of Financial Position and Statement of Comprehensive Income dealt with the
report are in agreement with the books of accounts and returns.d) the expenditure incurred and payments made were for the purpose of the Fund's.
Dated: July 17, 2013Dhaka
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Howladar Yunus & Co.Chartered Accountants
First Bangladesh Fixed Income FundStatement of Financial Position
As on June 30, 2013
Amount (Taka)30-Jun-13
ASSETS
Listed securities -at cost
Non-Listed Securities at cost
Cash and bank balances
Preliminary and issue expenses
Other current assetsTotal Assets
1,269,558,8841,085,499,7533,170,959,134
107,336,138124,071,672
34567
5,757,425,581
CAPITALAND LIABILITIES
CapitalRetained earnings
Dividend equalization reserve
5,000,000,000716,280,534
8
5,716,280,534
Current liabilities and provisions 41,145,0489
Total Capital and Liabilities 5,757,425,581
Net Asset Value per Unit
At Cost
At Market
11.43
11.64
The annexed notes form an integral part of these Financial Statements.
~Trustee
Investment Corporation of Bangladesh ( ICB)Asset Manager
RACE Management pel
Signed in terms of our report of even date annexed
Dated: July 17, 2013Dhaka
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First Bangladesh Fixed Income FundStatement of Comprehensive Income
For the period ended June, 2013
INCOMEDividend from investment in sharesProfit on sale of investmentInterest on bank deposits and bondsTotal Income
10
EXPENDITURE
Amortization of preliminary expensesManagement feesAnnual Listing FeeTrustee feesCDBLchargeCustodian feesAudit feeOther operating expensesTotal Expenditure
Net Profit for the periodLess:Market risk reserveLess:Dividend equalization reserveAccumulated profit carried forward
11
Earnings per unit for the period
Howladar Yunus & Co.Chartered Accountants
Amount (Taka)Apri10~2012 toJune
30.2013
35,521,958119,181,988867,273,792
1,021,977,737
16,801,030269,835,144
5,100,00012,142,581
47,797824,401
57,500888,750
305,697,203716,280,534
716,28Q,534
1.43
The annexed notes form an integral part ofthese Financial Statements.
~RACEManagement PCl
~Trustee
Investment Corporation of Bangladesh ( ICB)
Signed in terms of our report of even date annexed
Page 4
Dated: July 17, 2013Dhaka
Howladar Yunus & Co.Chartered Accountants
First Bangladesh Fixed Income FundStatement of Cash Flows
For the period from 01 April 2012 to 30 June 2013
Amount (Taka)1
Cash Flows from Operating Activities:
Dividend incomeInterest on bank deposits and bonds
Other advance deposit and receivable
Operating expenses
Net Cash from Operating Activities (A)
26,418,284879,752,201
(755,590)(265,956,676)639,458,219
Cash Flows from Investing Activities:
Value of listed securities
Issue and preliminary expenses
Non-Listed Securities at cost
Net Cash Used in Investing Activities (B)
(1,206,502,442)(176,496,891)
(1,085,499,753)(2,468,499,085)
Cash Flows from Financing Activities:
Capital contribution
Net Cash from Financing Activities (C)Net Increase in Cash (D = A+B+C)Opening cash and bank balances (E)Closing cash and bank balances (F = D+E)
5,000,000,000
5,000,000,000
3'170,959,~341
3,170,959,134
~L.Asset Manager
RACE Management PCl
TrusteeInvestment Corporation of Bangladesh ( ICB)
Dated: July 17, 2013Dhaka
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Howladar Yunus & Co.Chartered Accountants
First Bangladesh Fixed Income FundNotes to financial statements
For the period from 01 April 2012 to 30 June 2013
1. LegalStatus and Nature of Business
First Bangladesh Fixed Income Fund (hereinafter called as "Fund") was established under a TrustDeed signed on 15 February 2011 between Sonali Bank ltd, Janata Bank Ltd., Eastern Bank Ltd., ICBUnit Funds as 'Sponsor's and the Investment Corporation Bangladesh(ICB) as a "Trustee" under theTrust Act 1882. The Fund was registered with the Bangladesh Securities and Exchange Commission(BSEC)on 2 March 2011 under the Securities and Exchange Commission (Mutual Fund) Bidhimala(Rules) 2001. The operations of the Fund was commenced on 01 April 2012 after listing with Dhakaand Chittagong Stock Exchanges and fund investment permission from BSEC.
As provided in Trust Deed, RACE Management PCl is the Manager of the Fund. RACE ManagementPCl was incorporated as a private limited company under Companies Act 1994 on March 2008.
First Bangladesh Fixed Income Fund is a special purpose investment fund with tenure of ten years.The objectives of the Fund are the development of the Bangladesh Bond Market by improving thedemand side, promoting research based investing and becoming a captive buyer in the nascent fixedincome market in Bangladesh. The Fund consists of 500,000,000 units of Taka 10 each. The units ofthe Fund are transferable.
2. Significant Accounting Policies
2.1 Basisof preparation of accounts
These financial statements have been prepared under historical cost convention inaccordance with generally accepted accounting principles as laid down in the InternationalAccounting Standards (IASs)/lnternational Financial Reporting Standards (IFRSs), applicable tothe Fund so far adopted by the Institute of Chartered Accountants of Bangladesh asBangladesh Accounting Standards (BASs)/Bangladesh Financial Reporting Standards (BFRs).The disclosures of information made in accordance with the requirements of Trust Deed,Securities and Exchange Rules 1987, Securities and Exchange Commission (Mutual Fund)Bidhimala (Rules) 2001 and other applicable Rules and regulations.
2.2 Presentation of financial statements
The fund was registered with BSEC on 02 March 2011 and subsequently on 19 March 2012listed with Stock Exchanges with fill investment commencing from 01 April 2012 by receivinginvestment permission from BSEC. Therefore, Financial Statements are prepared andpresented covering the period from 01 April 2012 to 30 June 2013 and the transactions
before that date are duly accounted for. A net income of Tk. 133,764,017 from preliminaryperiod has been duly incorporated into the accounts.
The fund generated income of Tk. 259,651,010 (Interest Income Tk. 245,572,774; Dividend
Income Tk. 6,593,129 and Profit on sale of investment Tk. 7,485,107) and incurred expenses
Tk. 125,886,993 as pre-operational expenses after obtaining BSEC approval and before listed
with stock exchanges. All income and expenses were recorded in the accounts under
appropriate Heads of Accounts.
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Howladar Yunus & Co.Chartered Accountants
2.3 Investment
All purchases and sales of securities that require delivery within the time-frame established byregulation or market convention are recognized at the date of trading ie, the date on whichthe Fund commits to purchase or sell the investment.
Bonus entitlements, if any, are not accounted for as income rather included in the portfolio toreduce the average cost.
2.3.1 Valuation of investment
Listed securities are valued at average closing quoted market prices prevailed as of 30June 2013 on an aggregate portfolio basis.
Investment is recorded in the Financial position at cost.
2.4 Taxation
The income of the Fund is exempted from Income Tax as per SRO No. 333-Act/lncomeTax/2011 dated 10 November 2011, under Section 44(4) clause (b) of Income Tax Ordinance,1984; hence no provision for tax is required.
2.5 Amortization of preliminary expenses
Preliminary and issue expenses represent expenditure incurred prior to commencement ofoperations and establishment of the Fund. These costs are amortized within ten years' tenureafter adjusting interest income from escrow accounts as per trust deed and Securities andExchange Commission (Mutual Fund) Bidhimala (Rules) 2001.
2.6 Market risk reserve
Investment has been valued on aggregated portfolio basis and no provision is required to bemade on portfolio value of investments as of 30 June 2013.
2.7 Dividend policy
As per Rule 66 of Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001,the Fund is required to distribute in the form of dividend to its unit holders an amount whichshall not be less than 70% of annual profit during the year, net provisions.
2.8 Revenue recognisation
Gains/losses arising on sale of investment are included in the Revenue Account on the date atwhich the transaction takes place. Dividend and interest income are recognised as per BAS-18and Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules), 2001.
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Howladar yunus & Co.Chartered Accountants
Amount (Taka)
3. Listed Securities - At Cost 1,269,558,884
Sector-wise break up of investment in shares are as follows:
Sector/category Number of Amounts in Taka
shares Cost Market value Difference
Bank 6,853,185 214,791,285 163,867,588 (50,923,697)Cement 35,300 10,408,748 11,825,500 1,416,752Corporate Bond 16,125 15,279,275 15,101,063 (178,213)Engineering 200 5,000 9,560 4,560Food and Allied 63,527 35,366,952 55,316,098 19,949,147Fuel and Power 321,308 28,844,282 27,957,137 (887,145)Insurance 170,362 66,872,088 84,473,460 17,601,372Miscellaneous 8,800 6,160,888 6,348,105 187,217Mutual Funds 15,434,100 172,863,581 163,704,070 (9,159,511)NBFI 279,147 93,353,029 77,114,620 (16,238,409)Pharma 571,461 305,806,114 294,116,240 (11,689,874)Tannery 52,600 16,410,046 13,223,640 (3,186,406)Telecommunication 531,910 40,696,461 113,732,870 73,036,409Textile 24,000 959,472 602,400 (357,072)Travel & Leisure 3,051,570 261,741,665 348,184,137 86,442,472
27,413,595 1,269,558,884 1,375,576,486 106,017,602
4 Non-Listed Securities
Bank Asia - Zero Coupon BondRenata Limited - Short term BondSk. Akij Uddin Limited - Short term BondFarmers Bank Ltd.
209,944,196370,000,000250,000,000255,555,557
1,085,499,753
5 Cash and Bank BalancesFixed depositsShort term deposits with:
Sponsor A/e EBL-1011320165124Sponsor -JBL-004001452Sponsor EXIM- 00113100464648SponsorSEBL-0083-13100000007Sponsor-One Bank- 0123000000584Sponsor Premier Bank- 104136000000009Sponsor-E BL-1011320172403Esceow - EBL-1011320177327IPO-EBL(BDT)-10113602005 75IPO-EBL(USD)-1013050200585Sponsor-EBL-1011360207097Sponsor-EBL-1011360191973Sponso~EBG1011360212938Brac Bank ttd- 1526202236300003Brac Bank Ltd- 1526202236300002Brac Bank Ltd- 1526202236300001
1,374,469,259
53,209,99054,30995,168
560,680,900136,148,695950,125,027
89,48334,073,510
3,353,855795,000
20,235,953383,792
36,393,921781,695
29,39639,180
.3,170,959,134
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Howladar yunus & Co.Chartered Accountants
6 Preliminary and Issue ExpensesAmount (Taka) I
Total preliminary and issue expensesLess:Interest on escrow account
189,219,75465,082,586
Less:Amortization of preliminary and issue expenses124,137,168
16,801,030107,336,138
7 Other Current Assets
Interest receivablesDividend ReceivableOther advance and depositsReceivablefrom Securities
52,604,1769,103,6735,855,590
56,508,233124,071,672
8 Capital
500,000,000 units of Taka 10 each fully paid 5,000,000,000
9 Current Liabilities and Provisions
Payableto sundry securitiesManagement feesCustodian feesAudit feeWithholding income tax payableWithholding VAT payablePrinting & Publication expensesBankersto the issue
382,68874,082
824,40145,000
33,702,4314,621,446
100,0001,395,000
41,145,048
10 Interest on Bank Deposits and Bonds
Interest onShort term depositsFixed depositsCorporate bonds
461,187,880363,971,988
42,113,924867,273,792
11 Other Operating Expenses
Bank chargesOther expenses
420,690468,060888,750
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Howladar yunus & Co.Chartered Accountants
12. Others
12.1 These notes form an integral part of the annexed financial statements and accordingly are to beread in conjunction therewith.
12.2 Figures in these notes and annexed financial statements have been rounded off to the nearest Taka
Asset ManagerRACEManagement PCl Trustee
Investment Corporation Bangladesh (ICB
Dated: July 17, 2013Dhaka
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